letter - National Rural Housing Coalition

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Jul 9, 2018 - Committee on Banking, Housing and Urban Affairs. Committee on Appropriations. Hon. Sherrod Brown. Hon. Nit
NATIONAL RURAL HOUSING COALITION 1331 G Street, N.W., 10th Floor, Washington, DC 20005  (202) 393-5225  fax (202) 393-3034  http://ruralhousingcoalition.org/

July 9, 2018

Honorable Jed Hensarling Chairman Committee on Financial Services

Hon. Rodney Frelinghuysen Chairman Committee on Appropriations

Hon. Maxine Waters Ranking Member Committee on Financial Services

Hon Richard Shelby Chairman Committee on Appropriations

Hon. Mike Crapo Chairman Committee on Banking, Housing and Urban Affairs

Hon. Patrick Leahy Vice Chairman Committee on Appropriations

Hon. Sherrod Brown Ranking Member Committee on Banking, Housing and Urban Affairs

Hon. Nita Lowey Ranking Member Committee on Appropriations

On June 21, 2018, the Administration released “Delivering Government Solutions for the 21st Century”, its recommendations to reform and reorganize the federal government. The Administration proposal includes a drastic reorganization of government agencies including transfer of the United States Department of Agriculture (USDA) rural housing loan guarantee and rental assistance programs to the Department of Housing and Urban Development (HUD). The National Rural Housing Coalition is a national membership organization that supports improved federal rural housing programs and policies. We write to register our opposition to the Administration’s plan. It will not improve administration of the rural housing programs nor will it help accomplish the mission Congress established in Title V of the Housing Act of 1949, as amended. It will do little to improve housing conditions in rural America. The Administration argues that HUD provides more housing in USDA eligible areas, that the move would improve service delivery, and housing programs administered by HUD will allow both agencies to “focus on their core missions and, over time, further align the Federal Government’s role in housing policy”. We disagree. The Administration contends that HUD makes more FHA guaranteed loans than USDA in zip codes also served by USDA. The report ignores the principal and important differences between the two guarantees: USDA is a means-tested guarantee for low and moderate income households with an average loan of less than $145,000. Average annual income for households participating in the USDA program is approximately $60,000. FHA loans are not means-tested and the average FHA loan is over $50,000 larger at $201,000. The reorganization also proposes moving USDA rental assistance to HUD because it is similar to HUD’s section 8 voucher authority. The vast majority of rental assistance is used in section 515 rural rental housing developments. Apparently, the Administration would leave the section 515 mortgage portfolio of

NATIONAL RURAL HOUSING COALITION 1331 G Street, N.W., 10th Floor, Washington, DC 20005  (202) 393-5225  fax (202) 393-3034  http://ruralhousingcoalition.org/

14,000 developments and estimated $5.6 billion in preservation and repairs needs at USDA, creating the potential for an administrative nightmare for both owners and tenants. Recent USDA budgets have eviscerated rural housing and community development programs, proposing elimination of all rural housing direct spending except rental assistance. Consistent with those budgets the transfer plan ignores a number of these programs, including:      

Direct home ownership loans; Mutual self help housing grants; Home repair loans and grants; Multi-family housing revitalization financing; Farm labor housing loans and grants; and Guaranteed rental housing loans.

This proposal envisions a federal housing assistance system that does not respond to rural housing needs. It presumes elimination of any number of important and successful rural housing programs, leaves some 400,000 tenants of USDA financed rental housing and project owners caught between two federal agencies as the price tag for preserving rural rental housing continues to rise, and jeopardizes the efficient delivery of other rural development programs. Even if programmatic issues could be swept away, we question HUD whether could deliver housing assistance to rural America. Even with a diminished rural development field structure, USDA is in a far better position to deliver housing assistance to rural families than HUD. Some 400 rural development field offices are located in rural areas and some 50 state and territorial offices are mostly located in rural America. HUD has a federal regional and area office structure with few if any offices located in rural America. In its recent history, HUD has not delivered a direct loan or grant program of significant size. HUD works through state and local government, public housing authorities, and mortgage banks. HUD does not administer single family direct loans, home repair loans or grants, or farmworker housing assistance. Rural housing has never received much attention at HUD. The rural housing programs that are transferred to HUD will be quickly swallowed up in the much larger federal agency and will, over time, disappear.

This proposal, when coupled with the new Administration’s proposal for a new Bureau of Economic Growth, will significantly diminish the USDA field structure, depriving it of the finances and economies of scale available when housing, utilities, and business programs are delivered from the same system. Perhaps most importantly, this plan ignores the housing shortage in rural America. Years of declining investment in renovation of existing and construction of new housing in our small towns and farming communities leaves them without enough housing. A recent Wall Street Journal (May 30, 2018) article noted that “Fewer homes are being built per household than almost any other time in US history and it is even worse in rural areas”. The result is that in some rural communities economic growth is impeded by the lack of housing for workers.

NATIONAL RURAL HOUSING COALITION 1331 G Street, N.W., 10th Floor, Washington, DC 20005  (202) 393-5225  fax (202) 393-3034  http://ruralhousingcoalition.org/

Where housing available is apt to be in poor condition. Of the 25 million units located in rural and small communities, over 5 percent, or 1.5 million, of these homes are considered either moderately or severely substandard. Although most Americans take indoor plumbing and potable water at the tap for granted, it is unavailable to 4 percent of rural occupied units. When rural households can find housing, it is often too expensive for their incomes. According to the Harvard Joint Center on Housing Studies ( August 2016) “Overall, nearly 5 million rural households pay more than 30 percent of their monthly income toward housing and more than 2.1 million rural households spend more than half of their income on housing.” This Administration proposal does little to address the need for more and better housing in rural America. At its core is a plan to shuffle boxes on the federal government organization chart, cut spending, sow confusion and provide fewer housing resources to people and communities in need. We urge Congress to reject this plan. Sincerely,

Robert A. Rapoza Executive Secretary